Mexico Looks to Europe to Replace Asian Imports

Mexico is exploring new alternatives to implement its plan for import substitution from Asia, particularly from China. Initially, under the administration of Andrés Manuel López Obrador, the strategy focused on consuming products from the Americas. However, under Claudia Sheinbaum’s administration, options in Europe are now being considered. This is part of the plan being formulated by the Ministries of Economy and Finance to reduce Asian imports, which have exceeded 200 billion dollars since 2022—almost half of this amount comes from China.

Numbers That Speak In terms of imports, Europe plays an important role for Mexico, accounting for 12.7% of total imports, but Asia leads with 40%. Mexico has a Free Trade Agreement with the European Union (EU) that has been in effect since 2000, and there are efforts underway to modernize this agreement, which is expected to be signed in 2025. With this, Mexico and the EU aim for greater commercial integration, although there are still pending issues in energy and investments. The EU represents 87% of what Mexico imports from that continent. In the year 2000, imports from the EU amounted to around 14.3 billion dollars, while in 2023, it reached 65.1 billion dollars, indicating a growth of 4.5 times. On the other hand, imports from Asia, specifically from China, skyrocketed from 2.88 billion in 2000 to 114.19 billion in 2023, increasing nearly 40 times. This growth has made China the second most important supplier of goods for Mexico. This context reflects the significant challenge Mexico faces in achieving effective substitution for its Chinese imports. A Common Goal EU countries can be seen as a strategic ally, as they also seek to reduce their dependence on China, their largest supplier. According to data from the European Commission, imports from China to the EU totaled 515.9 billion euros in 2023, resulting in a trade deficit of 292 billion. The Commission acknowledges that there is a serious imbalance in the economic relationship between the EU and China, both in terms of trade and investment. However, the economic relationship with Mexico is quite the opposite; instead of being a risk, it is viewed as an opportunity since the trade balance is surplus, meaning the EU sells more to Mexico than it buys. The EU ranks third among Mexico's sources of imports, right after the United States and China. The most common products that Mexico imports from Europe include machinery, appliances, transport equipment, chemicals, and basic metals. In comparison, what Mexico acquires from China includes mobile phones, machinery, cars, auto parts, and data processing equipment. Here is where experts identify the challenge: needing what Mexico imports from China to be available from other countries, while also achieving competitive costs. From the economic research center "Mexico, How Are We Doing?", it is deemed necessary to develop a more specific plan to carry out the substitution of these Chinese imports, as well as an analysis of the components that the United States considers to be a risk to national security. In the Mexican business sector, it is mentioned that not everything can be replaced, as there are no other regions or countries that can offer certain products imported from China. In this sense, it is more beneficial to focus on strengthening the capacity for developing domestic inputs—such as in the case of chips—to enhance competitiveness, rather than wasting time and resources searching for substitutions that may take decades and do not generate significant added value.

The search for diversification of imports is key to Mexico's economic stability. By strengthening trade ties with Europe and developing local industries, the country can not only reduce its dependence on China but also foster job creation and internal economic growth. This approach could be vital for adapting to ever-changing global dynamics and seizing opportunities in new markets.